January Scrap Prices Jump
American Metal Market’s just-published January prices for both #1 busheling (prime) and shredded scrap (obsolete) posted meaningful increases, rising $45/ton to $380/ton (up 13%) and $345/ton (up 15%), respectively. These increases put prices of both grades to the highest levels we’ve seen since pre-recession 2008. These prices compare with prices of $866 for prime and $590 for shredded at the peak of the market.
Price Increases from Rising Demand...
Low scrap inventories at domestic mills are driving competition in the US in the face of modest increases in domestic production, particularly at the sheet mini-mills, which are seeing a pickup in market share because of their ability to restart operations quickly. Speculative traders have further driven up prices, as many buyers who delayed scrap purchases are now finding tight supply as traders had increased their buying in an attempt to get ahead of the higher expected prices.
…And Declining Supply
The harsh winter weather in the past few weeks in parts of the US has limited the availability of scrap, causing shredders and export yards to raise their buying prices to improve the flow. The weak dollar and short scrap supply in Europe from an unusually cold winter, and strong demand for steel in the Far East are enabling higher export prices, which is challenging the domestic market. Continued anemic industrial production in the US has also limited the availability of prime material.
Steel Prices Set to Rise
We expect raw material surcharges for February deliveries of long and flat products to rise $45/ton, and we expect to see at least that much of a gain in transactional prices as the market remains tight; the continued exception remains the beam market.